Tru-Test buys milk storage unit for $73m

Tru-Test is a leading manufacturer of animal weighing and recording equipment. Photo / Supplied

Tru-Test Group, the agri-tech group that ranked 16th on the TIN100 survey of the country's top research and technology firms, has bought milk storage and refrigeration firm Dairy Technology Services from local manufacturer NDA Group for $73 million.

The Auckland-based company bought the company after raising $5.4 million in a two-for-nine renounceable rights issue at 96 cents apiece, which it said would be used to help fund the DTS acquisition.

Though Tru-Test today said it wouldn't disclose the value of the acquisition, the December offer document and later amendment put the purchase price at $73 million, subject to adjustments based on working capital.

The acquisition included $68 million in non-current assets, of which $67 million were intangible, and would see Tru-Test take on up to $58 million in bank debt to help fund the deal. Tru-Test expects DTS to add 40 percent to its earnings before interest, tax, depreciation and amortisation, which were $5.9 million in the 12 months ended March 31 last year on sales of $103.4 million.

The purchase follows on from Tru-Test's $1 million acquisition of Radian Technologies in December as it looks to provide more integrated support for dairy farmers, chief executive Greg Muir said in a statement. DTS employs 80 staff at its Taranaki manufacturing facility and administration and sales office in Hamilton.

"The dairy industry will increasingly need to integrate new technologies and services if it is to achieve the sustainable growth it seeks," Muir said. Farmers "want stronger levels of support on farm to maximise the value of technology investments and ensure the efficient ongoing operation of farm systems."